Correlation Between Eskay Mining and Enduro Metals

Can any of the company-specific risk be diversified away by investing in both Eskay Mining and Enduro Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eskay Mining and Enduro Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eskay Mining Corp and Enduro Metals Corp, you can compare the effects of market volatilities on Eskay Mining and Enduro Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eskay Mining with a short position of Enduro Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eskay Mining and Enduro Metals.

Diversification Opportunities for Eskay Mining and Enduro Metals

0.38

Correlation Coefficient

Eskay Mining  Enduro Metals

Weak diversification

The 3 months correlation between Eskay and Enduro is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Enduro Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals Corp and Eskay Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eskay Mining Corp are associated (or correlated) with Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and Enduro Metals go up and down completely randomly.

Pair Corralation between Eskay Mining and Enduro Metals

Assuming the 90 days horizon Eskay Mining Corp is expected to generate 1.3 times more return on investment than Enduro Metals. However, Eskay Mining is 1.3 times more volatile than Enduro Metals Corp. It trades about -0.01 of its potential returns per unit of risk. Enduro Metals Corp is currently generating about -0.03 per unit of risk. If you would invest  23.00  in Eskay Mining Corp on September 21, 2024 and sell it today you would lose (5.00) from holding Eskay Mining Corp or give up 21.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eskay Mining Corp  vs.  Enduro Metals Corp

Eskay Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eskay Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eskay Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Enduro Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enduro Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Eskay Mining and Enduro Metals

The main advantage of trading using opposite Eskay Mining and Enduro Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining position performs unexpectedly, Enduro Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enduro Metals will offset losses from the drop in Enduro Metals' long position.

The idea behind Eskay Mining Corp and Enduro Metals Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.